It’s an unfortunate fact, but every day there are thousands of people who die without owning a life insurance policy. In addition to the trauma and grief of losing a loved one, your family must now deal with final arrangements—funeral and burial or cremation—and the financial burden there will be because the deceased was uninsured.
Jump ahead to these sections:
- What Can You Do Immediately After a Loved One Dies Without Life Insurance?
- Who Pays for the Funeral or Memorial If a Loved One Dies Without Life Insurance?
- What Should You Do After the Funeral and Memorial?
If this describes your situation, don’t feel alone. Many people don’t feel they need life insurance. But they fail to realize that they’re not buying it for themselves, but for their loved ones being left behind. The reasons they gave for not buying life insurance—“I don’t need it,” “I can’t afford it,” and “I don’t have time to talk about it”—are of little consolation after someone dies without life insurance.
What Can You Do Immediately After a Loved One Dies Without Life Insurance?
Moments after you’ve been with a loved one who died or have been notified by someone else, many thoughts are going to go through your head. Some are going to be spiritual in nature, some will be memories of your loved one, and some will be practical questions, such as “How much will the funeral cost and how will I pay for it?”
One of the first calls you’ll make after your loved one passes will be to a funeral home to schedule a time for you to go there and talk with someone in detail about the funeral and burial. Here is a list of the services you’ll be asked to consider and their average costs in 2021:
- Funeral home’s basic service fee (not optional): $2,195
- Transporting remains to funeral home: $350
- Embalming: $750
- Preparing the body (makeup, hair styling, etc.): $255
- Facilities and staff to manage a viewing: $425
- Facilities and staff to manage a funeral ceremony: $500
- Hearse: 340
- Service car: $150
- Basic memorial printed package: $175
- Metal casket: $2,500
- Vault for burial: $1,495
The median cost of a funeral with viewing and burial: $9,135
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Who Pays for the Funeral or Memorial If a Loved One Dies Without Life Insurance?
Once you’ve met with the funeral director and have made the many decisions needed to meet your expectations of a proper and befitting funeral and burial, the question you’ll invariably have to answer is, “How will you be paying for these funeral expenses?”
If your loved one has life insurance, it’s a pretty straightforward process. You notify the life insurance company, who then writes you a check to pay for the final expenses.
It gets much more complicated if your loved one dies without life insurance. If you have $10,000 or more in your checking or savings accounts, you could pay cash for all of the final expenses. If that’s not an option for you, consider these alternatives:
1. Personal loan
Personal loans can be used for the cost of a funeral and burial. You should only apply for a personal loan if you have good credit and feel that you can comfortably pay off the loan in the next three to five years.
Banks, credit unions, and specialized lenders offer guaranteed funeral loans, and the interest rates can range from 18% to 36%.
2. Credit card
Another funeral financing loan option to help you pay for funeral costs is a credit card. If you can qualify for a new card, use a zero percent introductory rate credit card.
These cards allow cardholders to pay off the balance without paying any interest for a set period of time, which can range anywhere from six months up to 24 months or more. The interest rate can be 25% or higher after the zero percent introductory period.
3. Ask for contributions
To avoid covering the funeral costs all by yourself, try asking friends and family to contribute to share the costs.
First, determine how much the funeral and burial will cost. Then, divide the amount by the total number of people that will be contributing. Involve contributors in planning the funeral since they’re financial participants.
4. Ask the funeral director for a payment plan
This is similar to a loan, but you’ll be paying the funeral home instead of a lending company. You may need to make monthly payments for a long time, but this won’t affect your credit score. A loan amount of $1,000 to $10,000 carries 15-25% interest rates for a term of up to 36 months.
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5. Contact Social Security Administration
If your loved one has collected Social Security before their death, the Social Security Administration may offer some assistance to your family.
Social Security provides a $255 death benefit to those who qualify. Contact the Social Security Administration office to learn more.
6. Contact a non-profit organization
Several non-profit organizations offer assistance to survivors. These organizations provide financial assistance to help pay the funeral cost of someone whose estate doesn’t have the money or if that person’s family or friends can’t pay for the funeral.
7. Start a Kickstarter fundraising campaign
You can crowdfund the funeral on GoFundMe.com or Kickstarter.com. If you request that family and friends contribute money rather than give flowers, the immediate family may be able to pay for the funeral.
Crowdfunding sites make fundraising easy by giving you a platform to tell everyone—family, friends, and strangers - your story and how you’re struggling to pay the cost of your loved one’s funeral.
8. Funds within the deceased’s estate
Funds within the estate might be subject to probate if they weren’t kept within a trust. If the estate does have to go through probate, it could take years for the funds to be released.
If that’s the case, negotiate with the funeral home by providing proof of funds within the estate to cover the cost of the funeral. They may defer payment until the estate clears probate, but they’ll likely charge you interest while they’re waiting.
9. Veterans benefits
If your loved one was in the military, they are entitled to free burial in a national cemetery. The gravesite, vault, marker, opening, and closing of the grave are free.
A burial allowance will be given to your family by the Veterans Administration office to pay other funeral expenses. If your loved one is not buried in a national cemetery, the VA will pay a lump sum for you to buy a burial plot elsewhere.
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10. Employer or union benefits
Check the employee benefits of your deceased loved ones. Sometimes there is an employee or union benefit that pays a lump sum for assistance with funeral costs.
11. Victim compensation program or accident compensation
If your loved one was a victim of a crime or involved in an accident, you can look for some assistance. If they died in a motor vehicle accident, there is a possibility that the auto insurance will cover part, if not all, of the funeral costs.
Check the auto insurance policy's no-fault coverage and accidental death clause to see if the insurer will at least pay a portion of the funeral expenses.
12. Inquire about federal-state assistance
If you can’t find the money to pay for the funeral costs, it’s possible to get some help from the government. People with a disability, on Medicaid, or are indigent may qualify for financial assistance from the state, such as Medicaid funeral assistance.
13. Indigent Burial Assistance Programs
Indigent Burial Assistance Programs can be found in many counties across the United States. These programs are funded for the sole purpose of helping those who are the neediest have their loved ones buried. The state arranges a simple burial in a designated area of a municipal cemetery. Direct cremation without the use of a funeral home is also a low-cost solution.
If your family member who passed away was on some type of government assistance, they might qualify for indigent burial assistance. The state will pay part or all the cost, and you may be eligible for cash assistance. Contact your nearest Human Services office to learn the details and apply.
What Should You Do After the Funeral and Memorial?
After a funeral, you may want to join with family members and close friends of your loved one at a reception where everyone can be together, reminisce, and connect with others that are also grieving.
This should be a low-stress event for you. Its primary purpose is to bring everyone together; don’t worry about entertainment or elaborate menus. Most people will gladly help out if you ask them.
Several good reasons to get together are:
- It provides people the opportunity to express sympathy and offer condolences to the family of the deceased.
- It gives family and friends time to support each other as they mourn their loss.
- It’s an opportunity to celebrate the life of the one who passed away.
This simple get-together can be hosted at a family member’s home, a restaurant, a fellowship center at a church, or a community center. If the weather permits, you can also have it at a park, which is an excellent option for attendees with young children.
Don’t Let This Happen to You
As we’ve seen, it can be challenging financially for surviving loved ones when someone dies without life insurance. Though we’ve explored other options, none of those help the family as much as being left a lump sum of money by the deceased that can be used for final expenses.
Your loved one may need help finding the best life insurance. Offer to help them evaluate the different types of policies available and find one that will protect their family at a price they can comfortably afford. An independent life insurance agent can help you find the right policy.